Arkansas Department of Human Services, Division of Medical Services v. Northwest Health System ( 2022 )

Cite as 2022 Ark. App. 98ARKANSAS COURT OF APPEALS
DIVISION II
No. CV-21-56
ARKANSAS DEPARTMENT OF Opinion Delivered March 2, 2022
HUMAN SERVICES, DIVISION OF
MEDICAL SERVICES APPEAL FROM THE PULASKI
APPELLANT COUNTY CIRCUIT COURT, SECOND
DIVISION
[NO. 60CV-20-3620]
V.
HONORABLE CHRISTOPHER
NORTHWEST HEALTH SYSTEM CHARLES PIAZZA, JUDGE
APPELLEE
AFFIRMED
RAYMOND R. ABRAMSON, Judge
The Arkansas Department of Human Services, Division of Medical Services (DHS)
appeals the Pulaski County Circuit Court order dismissing its petition for review of a
decision by the Arkansas Department of Health, Office of Medicaid Provider Appeals
(DOH) entered in favor of Northwest Health System (Northwest). On appeal, DHS argues
that the circuit court erred by finding that it failed to properly serve both DOH and NHS
with the petition for review in accordance with the Administrative Procedure Act (APA)1
and Arkansas Rule of Civil Procedure 5. We affirm.
1
The APA is codified at Arkansas Code Annotated §§ 25-15-201 to -218 (Repl. 2014
& Supp. 2021).
DHS administers the Arkansas Medicaid Program. Northwest is enrolled to provide
medical-care services authorized under Medicaid. The Medicaid Fairness Act2 designates
DOH as the agency to conduct all Medicaid provider3 administrative appeals of adverse
decisions. See Ark Code Ann. § 20-77-1704(b)(1)(C).
On May 29, 2020, a DOH administrative law judge (ALJ) issued findings of fact and
conclusions of law reversing DHS’s denial of reimbursement of inpatient psychiatric-
hospitalization costs to Northwest for Medicaid beneficiary, H.K. On June 25, DHS filed a
petition for review of the DOH decision pursuant to the APA in the Pulaski County Circuit
Court.
On July 23, DHS emailed the ALJ “requesting the record for case 20190449. We
need to file the record by August 19, 2020. Thank you.” On July 24, DHS filed proof that it
had served Northwest’s registered agent by certified mail on July 20.
On August 3 at 8:13 a.m., DHS again emailed the ALJ and stated,
Pursuant to Arkansas Code Annotated section 25-15-212, DHS requests that the
entire record, including the transcripts of the testimony, be prepared for filing in the
circuit court. Please advise me when the record is ready for filing, and I will pick it
up. DHS is required to file the record on or before August 19, 2020.
2
The Medicaid Fairness Act is codified at Arkansas Code Annotated §§ 20-77-1701
to -1718 (Repl. 2014).
3
The Medicaid Fairness Act defines provider as “a person enrolled to provide health
or medical care services or goods authorized under the Arkansas Medicaid Program.” Ark
Code Ann. § 20-77-1702(15).
2
On August 3 at 8:33 a.m., the ALJ responded to DHS and added Northwest’s counsel as a
recipient. The ALJ stated,
I did not see [the] previous email on the 23rd, so your email, which I saw for the first
time this morning made me aware for the first time that this appeal had been filed. I
looked on the eflex system and it appears the appeal was filed by you on June 25. I do
not know why approximately one month went by before DHS notified us of the
appeal.
In any event, it is doubtful that we will be able to have the record prepared by August
19. We will do the best we can under the circumstances.
On August 3 at 10:25 a.m., Northwest’s counsel responded, “[W]e did not receive it on time
either.” On August 3 at 12:04 p.m., DHS responded to both Northwest and the ALJ and
stated in part as follows:
DHS served the petition on [Northwest’s] registered agent on July 20, 2020, as
required by Rule 4 of the Arkansas Rules of Civil Procedure, and DHS requested the
record on July 23, 2020. Clearly, DHS filed its appeal timely, served [Northwest] as
required, and requested the record shortly after service of the petition. . . . Given that
Counsel appears to be unaware of the appeal, I have attached a courtesy copy to this
email.
Furthermore, as it appears that the record will not be completed by August 19th, I
will seek an extension as allowed.
On August 7, DHS moved the circuit court for an extension of time until October
16 to file the administrative record. In its motion, DHS alleged that on July 23, it had asked
DOH to prepare the record and that on August 3, DOH had informed the parties that it
needed additional time to prepare the record due to its volume.
After DHS filed its motion on August 7, the ALJ emailed DHS concerning its request
for an estimated date for the completion of the record. The ALJ included Northwest’s
3
counsel as a recipient. The ALJ stated that he could not provide an estimated date of
completion of the record, and he further stated,
I noticed in your motion [to the circuit court] you stated that ‘On Monday, August 3,
2020, [DOH] informed the parties that due to the volume of the record, it will need
additional time for its preparation. The administrative hearing took approximately
7.5 hours to complete over multiple days.’ I did not, in fact, tell you that we needed
additional time due to the volume the record. The additional time is possibly needed
because we were not informed of the appeal until a month after it was filed.
Thereafter, on August 11, Northwest moved to dismiss DHS’s petition for review in
the circuit court. Northwest argued that DHS had failed to serve the petition for review on
both DOH and Northwest’s counsel as required by the APA and Arkansas Rule of Civil
Procedure 5. Northwest attached the email correspondence with DHS and the ALJ.
On August 17, the circuit court granted DHS an extension to file the record until
October 16. On October 14, the administrative record was filed with the circuit court.
On October 26, the circuit court held a hearing on Northwest’s motion to dismiss,
and on November 2, the circuit court granted the motion and dismissed DHS’s petition for
review with prejudice. The court did not issue findings. DHS appealed the dismissal to this
court.
On appeal, DHS argues that circuit court erred by dismissing its petition for review
because (1) it properly served Northwest in accordance with Arkansas Rule of Civil
Procedure 4, and (2) it was not required to serve the petition on DOH.
We first address DHS’s argument that it was not required to serve the petition for
review on DOH. DHS acknowledges that the APA requires an appealing party to serve a
4
petition for review on the agency rendering the decision and that it did not serve DOH with
the petition in this case. However, DHS claims that it was not required to serve DOH because
DHS is the agency that administers Medicaid, and DOH was acting on behalf of DHS. In
other words, DHS asserts that the APA does not require DHS to serve itself. DHS
additionally claims that even if the APA required it to serve DOH, the error was cured
because the administrative record was timely filed.
The appellate courts review issues of statutory interpretation dev novo. Dachs v.
Hendrix, 2009 Ark. 542, 354 S.W.3d 95. The basic rule of statutory construction is to give
effect to the intent of the legislature. Id. Where the language of a statute is plain and
unambiguous, we determine legislative intent from the ordinary meaning of the language
used. Id. No word is left void, superfluous, or insignificant. Id. The appellate courts, however,
will not engage in statutory interpretations that defy common sense and produce absurd
results. Id.4
The APA provides that an appealing party has thirty days to appeal the agency’s final
decision by filing a petition for review in the Pulaski County Circuit Court or the circuit
court of any county in which the petitioner resides or does business. Ark. Code Ann. § 25-
15-212(b)(1). “Copies of the petition shall be served on the agency and all other parties of
4
Under the APA, the appellate courts typically review DOH’s decision rather than
that of the circuit court; however, DOH’s decision has not yet been reviewed by the circuit
court. Instead, the circuit court dismissed the petition for lack of proper service. Thus, our
review is limited to the circuit court’s finding rather than DOH’s decision. See Ark. Beverage
Retailers Ass’n, Inc. v. Moore, 369 Ark. 498, 256 S.W.3d 488 (2007).
5
record in accordance with the Arkansas Rules of Civil Procedure.” Ark. Code Ann. § 25-15-
212(b)(2). Within thirty days after service of the petition or within such further time as the
court may allow but not exceeding an aggregate of ninety days, the agency shall transmit to
the reviewing court the original or a certified copy of the entire record of the proceeding
under review. Ark. Code Ann. § 25-15-212(d)(1). The APA defines agency as “a board,
commission, department, officer, or other authority of the government of the State of
Arkansas, whether within, or subject to review by, another agency, except the General
Assembly, the courts, and the Governor.” Ark. Code Ann. § 25-15-202(2)(A).
The Medicaid Fairness Act mandates that “[a]n administrative law judge employed by
the Department of Health shall conduct all Medicaid provider administrative appeals of
adverse decisions.” Ark Code Ann. § 20-77-1704(b)(1)(C). DOH is a cabinet-level
department separate from DHS and reports to the governor. Ark. Code Ann. § 25-43-
104(a)(7)–(8) & (b) (Supp. 2021); see also Ark. Code Ann. § 25-43-801 (Supp. 2021).
In this case, we hold that the APA required DHS to serve its petition for review on
DOH. The APA mandates that “[c]opies of the petition shall be served on the agency,” Ark.
Code Ann. § 25-15-212(b)(2) (emphasis added), and the APA defines agency as “a board,
commission, department, officer, or other authority of the government of the State of
Arkansas, whether within, or subject to review by another agency.” Ark. Code Ann. § 25-15-
202(2)(A). The Medical Fairness Act assigns DOH the duty to conduct Medicaid provider
6
administrative appeals, and DOH issued the decision in this case.5 Further, service of the
petition for review on the agency initiates the preparation of the record. Moreover, even
though DHS filed the record within the extension granted by the circuit court, the timely
filing does not relieve DHS of the APA’s requirement to serve the agency with the petition.
Accordingly, we hold that the circuit court did not err by dismissing DHS’s petition
for review for its failure to serve DOH with the petition as required by the APA. Because we
affirm the circuit court’s dismissal as a result of DHS’s failure to serve DOH, we need not
address DHS’s remaining argument concerning service on Northwest.
Affirmed.
HARRISON, C.J., and GLADWIN, J., agree.
David Warford, Ark. Dep’t of Human Services, Office of Chief Counsel, for appellant.
Friday, Eldredge & Clark, LLP, by: James M. Simpson and Kimberly D. Young, for appellee.
5
In its brief, DHS repeatedly relies on this court’s decision in Odyssey Healthcare
Operating A. LP v. Arkansas Department of Human Services, 2015 Ark. App. 459, 469 S.W.3d
381, to discuss the relationship between DOH and DHS. However, in Odyssey, we addressed
subject-matter jurisdiction. See id.7